UK government clears path for nuclear new build

18 October 2010

Revised draft national Energy Policy Statements have been presented to UK parliament by energy and climate change secretary Chris Huhne. He announced progress in ensuring that nuclear energy will play a significant role in meeting the UK's future energy needs.

In July, energy minister Charles Hendry announced that the new coalition government would launch a re-consultation on revised draft Energy Policy Statements. The statements are a key part of revisions to UK planning reforms to help ensure large infrastructure projects like nuclear power plants can go ahead with the minimum of delay.

"I am today announcing this further consultation," Huhne told parliament. "We have decided on this further consultation in particular because of changes which have been made to the Appraisals of Sustainability for the non-nuclear energy National Policy Statements following the previous consultation."

He noted, "At least one-quarter of the UK's electricity generating capacity needs to be replaced by 2020 and it will be important we create the right environment for business to invest in the energy market. The revised statements will give investors the certainty they need to bring forward proposals to maintain security of supply and ensure progress towards decarbonisation."

Huhne also told parliament that he had found that "the generation of electricity from the nuclear reactor designs known as the AP1000 and the EPR is justified."

He said that he came to this decision because "there is a clear need for the generation of electricity by the nuclear reactor designs ... because of the contribution they can make to increased security of energy supplies and reduced carbon emissions." He added, "Against this the radiological detriment to health from these nuclear reactor designs and their associated waste facilities will be low compared to overall levels of radiation, and effectively controlled by the UK's robust and effective regulators. I have therefore concluded that the reactor designs should be justified."

However, with regards new sites for nuclear power plants in the UK, Huhne announced that of the eleven sites earlier deemed suitable for construction by the previous government, three had been removed from the list. He said that the existing Dungeness site "is not suitable for deployment by 2025, due to concerns over the impact of a potential station on important habitat sites." Meanwhile, the proposed Braystones and Kirksanton sites not far from Sellafield in Cumbria were deemed unsuitable "due to concerns over whether they were credible for deployment by 2025 and the potential impact that they could have on the Lake District National Park."

No subsidies

Huhne reiterated the government's stance that there will be no public subsidy for new nuclear power. He said, "To be clear, this means that there will be no levy, direct payment or market support for electricity supplied or capacity provided by a private sector new nuclear operator, unless similar support is also made available more widely to other types of generation."

However, he added, "I would also like to make it clear that we are not ruling out action by the government to take on financial risks or liabilities for which it is appropriately compensated or for which there are corresponding benefits." Huhne noted that the UK is already party to international conventions for civil liability from nuclear accidents and already caps operators' liability at £140 million ($220 million). He said that the government will consult later this year on its proposals to implement amendments to these conventions, which will "impose a more stringent regime for operators than the current one, and alongside these improvements, the government will be consulting on whether to continue to include an upper limit on operator liability, as permitted by the conventions."

"Arguably," Huhne said, "few economic activities can be absolutely free of subsidy in some respect, given the wide ranging scope of state activity and the need to abide by international treaty obligations. Our 'no subsidy' policy will therefore need to be applied having regard to proportionality and materiality."

He stressed that nuclear operators will be required to meet in full their waste management, waste disposal and decommissioning costs. He said that operators would be given "greater clarity over which liabilities require monies to be set aside in segregated funds."

In a statement, Huhne said: "I'm fed up with the stand-off between advocates of renewables and of nuclear which means we have neither. We urgently need investment in new and diverse energy sources to power the UK. We'll need renewables, new nuclear, fossil fuels with CCS, and the cables to hook them all up to the grid as a large slice of our current generating capacity shuts down. The market needs certainty to make this investment happen, and we are determined to clear every obstacle in the way of this program."

He added, "So today we are setting out our energy need which will help guide the planning process, so that if sound proposals come forward in sensible places, they will not face unnecessary hold-ups. And I am making clear that new nuclear will be free to contribute as much as possible with the onus on developers to pay for the clean-up."

Keith Parker, chief executive of the UK's Nuclear Industry Association (NIA), said that he is "delighted to see that the coalition's positive words have been matched by some concrete actions."

He added, "Our member companies are preparing to invest billions of pounds in the UK's energy infrastructure and we welcome this added clarity fro government." Parker said, "These positive moves from government – coupled with a maintained forward progress – will reassure those investors that the political framework is sufficiently stable to allow that commitment to be made."

Tidal megaproject too costly

While Huhne's announcements bode well for nuclear new build, an enormous proposed tidal power project in the Severn estuary was shelved. Huhne reported that a two-year feasibility study into the project had concluded "that the government does not see a strategic case at this time for public funding" of this project, the cost of which was put at over £30 billion ($48 billion).

He said, "The costs and risks for the taxpayer and energy consumer would be excessive compared to other low-carbon energy options. Furthermore, uncertainties over compliance with regulation would add to the cost and risk of construction." Huhne added, "The government believes that other options, such as the expansion of wind energy, carbon capture and storage and nuclear power, represent a better deal for taxpayers and consumers at this time."